RM3,100 GLC wage no basis for national minimum, say employers

 Employer and business groups point out that small businesses cannot match big corporations in profitability, making it difficult for them to pay higher wages.

Employers fear that raising the minimum wage to RM3,100 per month could put some small companies out of business. (Bernama pic)

PETALING JAYA:

Big corporations such as government-linked companies (GLCs) should not be used as the yardstick for determining minimum wage levels, according to employer and business groups.

The Malaysian Employers Federation (MEF) and Federation of Malaysian Manufacturers (FMM) pointed out that small businesses were in a different league from large firms, making it difficult for them to pay higher wages.

MEF senior advisor Syed Hussain Syed Husman said GLCs and government-linked investment companies (GLICs) were in a very different position in terms of profitability, productivity and their capacity to absorb higher wage costs.

“The operating environment and business models of SMEs differ substantially from those of GLCs and GLICs,” Syed Hussain told FMT.

Syed Hussain Syed Husman.

In any case, he said, data from the statistics department showed that the median monthly wage for employees in the formal sector had already reached RM3,027, well above the RM1,700 minimum wage set by law.

He pointed out that raising the minimum wage from RM1,700 to RM3,100 would represent an 82.4% increase in wage costs. This, he added, could also push up overtime payments, statutory contributions and salaries further up the pay scale.

The Malaysian Trades Union Congress (MTUC) had recently urged the government to set the minimum wage at RM3,100 per month under Budget 2027, which will be tabled for debate in the Dewan Rakyat on Oct 9.

The government has set a benchmark of RM3,100 as a living wage for GLC and GLIC employees.

A cost-of-living estimate by the Employees Provident Fund and Universiti Malaya shows that a monthly income of RM3,100 would enable a family to participate meaningfully in society, pursue personal interests and support family development without falling into financial stress.

Prime Minister Anwar Ibrahim told Parliament last year that 34 GLCs and GLICs had adopted the RM3,100 living wage.

FMM president Jacob Lee said workers should be paid more when companies perform well, but the profits of a few large firms did not reflect the situation faced by most businesses.

He said a large increase in the minimum wage would also push up the salaries of more experienced workers, as companies would need to maintain a clear gap between junior and senior staff.

William Ng.

“The profits of a small number of highly successful corporations cannot be treated as representative of the wider business community,” he said in a statement.

The Small and Medium Enterprises Association of Malaysia (Samenta) agreed that workers should earn more, but said a RM3,100 minimum wage would be too high for most small businesses.

Samenta president William Ng said the increase could force some firms to stop hiring, lay off workers or even go out of business.

He said small firms could not be compared with large companies making billions in profits.

“Many SMEs are already struggling with higher electricity, transport and raw material costs. Wage increases should be gradual, and there must be greater government support,” he added.  - FMT